Shmuel Metz asks: >You don't think that, e.g., the Honeywell H-200, IBM 650, IBM 1401, >RCA 301, UNIVAC 1004, UNIVAC SS-80/SS-90, had already destroyed the >reproducer and tabulator markets and that the ubiquity of tape drives >had already destroyed the collator and sorter market?
Heading in that direction by 1964, agreed. I'll amend my remark to say that IBM held the leading market position in data processing prior to the System/360. Some of that market was electromechanical, and some was electronic. The System/360 was bound to displace most of both segments...or destroy the company. I'll respond to a couple interesting points Peter Farley raised: >IBM never seems to have acquired or internalized the value of the >concept of a loss leader. I'm not 100% sure what you mean by "loss leader" here. Certain pricing practices can be illegal, and to my knowledge IBM doesn't do illegal (or unethical). But that point aside I still disagree. There's ample evidence for my disagreement in IBM's annual report. Take a look at IBM's research and development investments. Compare them to other corporations' investments. IBM's management clearly understands the concept of "losing" money for many, many years before turning a profit on those considerable investments. Or not turning a profit -- many investments simply don't bear fruit despite best efforts. Power servers are a good example of a success. IBM is the leader in the distributed UNIX server market and by quite a margin. Yet rewind the clock a couple decades and *nobody* would have predicted that. IBM doggedly, persistently focused on succeeding in that market. And IBM did it the old fashioned way: with lots of long-term investments to develop and to build better products than the competition. >...IBM is famous for disposing of any money-losing product to >maintain the corporate philosophy of always (and only) being >in high-margin businesses. I don't know that IBM is particularly "famous" for spinning off business units. Companies such as AT&T, General Motors, USX/U.S. Steel, Westinghouse, and General Electric among others would outrank IBM on that score. I can think of many companies that bear zero resemblance to their pasts, but that's not true of IBM. IBM began as a business data processing solutions company with its Hollerith roots and is still a business data processing solutions company. Moreover, IBM has been transforming itself through practically its entire corporate life. Spinoffs are hardly new. IBM sold its food scale business to Hobart in *1934*, for example. And the food scale business is still a great business for Hobart. Hobart's current models are also much, much better than the 1934 models. But how are spinoffs "deliberately reducing the effectiveness of new technology," which was what you accused IBM of doing? Isn't spinning off a particular business to a better steward for the circumstances exactly the opposite? Hitachi builds fantastic hard disk spindles and continues to find ways to improve the state-of-the-art. Lenovo builds great personal computers and has been expanding into new mobile phones and tablets. Lexmark keeps advancing printing technology. Toshiba, which already had a significant retail systems market presence, continues to figure out new ways to make retailing more efficient. But even if Hitachi, Lenovo, Lexmark, and Toshiba aren't increasing "the effectiveness of new technology," why would that be IBM's fault? Wouldn't it be the fault of Hitachi, Lenovo, Lexmark, and/or Toshiba? By the way, these were not "money-losing" businesses, at least not inherently. Otherwise the companies I just named wouldn't be successful in those businesses as they are. Wouldn't a company maniacally focused on expanding "the effectiveness of new technology" -- on innovating -- be precisely the company that spins off its mature business units? "High-margin businesses" is practically a synonym for "highly innovative products," or at least those terms are highly correlated. -------------------------------------------------------------------------------------------------------- Timothy Sipples GMU VCT Architect Executive (Based in Singapore) E-Mail: sipp...@sg.ibm.com ---------------------------------------------------------------------- For IBM-MAIN subscribe / signoff / archive access instructions, send email to lists...@listserv.ua.edu with the message: INFO IBM-MAIN
